* Record Third Quarter Revenues of $3.5 Million, up 308%
* Record Third Quarter Earnings of $1.9 Million, up 470%
BEIJING, Nov. 15 /Xinhua-PRNewswire/ -- Dolce Ventures, Inc., which is in
the process of changing its name to Sino Gas International Holdings, Inc.
(OTC Bulletin Board: DLCV) (the “Company”), a rapidly growing developer of
natural gas distribution systems in small- and medium-sized cities, as well
as a distributor of natural gas to residential, commercial and industrial
customers in China, today reported record financial results for third quarter
and nine months ended September 30, 2006.
Third Quarter Highlights:
-- Revenues increased 308% YOY to a record $3.5 million
-- Gross profit increased 380% YOY $2.6 million
-- Operating income increased 492% YOY $2.1 million
-- Net income increased 470% YOY to a record $1.9 million, or $0.02 per
fully diluted share, up from $0.3 million, or $0.00 per share, in the
third quarter of 2005
Revenues for the three months ended September 30, 2006 increased 308%
over the same period in 2005 to a record $3.5 million, driven by the
completion of 10,000 household connections in Da Tun Mei Dian project during
the quarter. Net income during the quarter increased 470% year-over-year to
a record $1.9 million, or $0.02 per fully diluted share, up from $0.3
million, or $0.00 per share, in the third quarter of 2005. (Please see
discussion below under Recent Developments for events that impact the
Company’s shares outstanding and earnings per share.)
Commenting on the results, Mr. Yu-Chuan Liu, Chairman and CEO of the
Company, said: “During the third quarter of 2006 our sales and net income
reached new highs, as we continued to expand our distribution systems and to
add new customers. Also during this period, we made substantial progress in
the execution of our business plan by completing a reverse merger and
financing with Dolce Ventures, which gives us access to the US capital
markets and allows us to broaden our investor base, create a liquid market
for our stock, and support the accelerated growth of our business. Our near-
term objective now is to expand our distribution systems into four additional
cities, which will bring us one step further in our longer-term goals of
increasing our market share and become a significant distributor of natural
gas in China.”
Gross profit for the three months ended September 30, 2006 increased 380%
from the same period last year to $2.6 million, or 75% of revenue. This
increase in gross profit was due to an increase in the number of customers as
well as the fact that associated connection fees have higher margin.
Selling, general and administrative expenses were $0.5 million or 13.8%
of revenue, in the third quarter of 2006, versus $0.2 million, or 21.5% of
revenue, in the comparable period last year. Our operating costs increased
in absolute terms as we strengthened our management team, but decreased as a
percentage of revenues as we benefited from economies of scale.
Operating income for the three months ending September 30, 2006 increased
492% to a record $2.1 million, or 61% of sales, compared to $0.4 million for
the same period of 2005.
Revenues for the nine months ended September 30, 2006 increased 50% to
$4.9 million, compared to $3.3 million in the same period last year. Over the
same period, gross profits reached $3.1 million, or 63% of revenue.
Operating income increased 71% to a record $2.4 million, or 61% of sales,
compared to $1.4 million for the nine months ended September 30, 2006. Net
income increased 76% to $2.2 million, compared to $1.2 million for the nine
months ended September 30, 2005. Diluted earnings per share were $0.02 for
the for the nine months ended September 30, 2006, compared to $0.01 in the
same period last year.
“In the first nine months of 2006, we expanded our distribution systems,
added new customers and grew revenues and profits to record levels. We
currently expect our business to continue to grow as we add four new
distribution systems currently under construction, and two additional
systems, currently in the planning stages, in the coming quarters,” stated
Mr. Liu.
Financial Condition
At September 30, 2006, the Company had $5.3 million in total cash and
short-term investments, $7.4 million in working capital, and no long-term
debt. Cash flow from operations for the nine months ended September 30, 2006
totaled $3.2 million, up from $1.3 million last year. Capital expenditures
totaled $3.8 million in the nine months ended September 30, 2006.
Shareholders’ equity stood at $19.9 million, compared to $18.3 million at
year end 2005.
Business Outlook
The Company believes it is likely that demand for natural gas over the
next several years will grow at a faster rate than the overall growth in the
Chinese economy, driven by growing urbanization and recent government
legislation designed to enhance the use of cleaner energy in China. The
market has significant room for growth, as the ratio of natural gas
consumption in China’s energy mix is far below the world average, with
current consumption at approximately 3% of total energy consumption.
“Our strategy to grow our gas distribution business is focused on
smaller cities with a population of no more than one million, where there is
typically less competition to obtain a franchise, and where the franchise
provides us exclusivity. In addition, we seek to contract for long-term
supplies of natural gas at favorable prices and terms, so as to attain a
favorable cost structure,” Mr. Liu stated. “We are very pleased with our
progress to-date in executing our plan and we are excited about the
opportunities ahead for profitable growth as we continue the build out of our
distribution systems in small and medium cities in China.”
Recent Developments
In connection with the Company’s reverse merger transaction, on
September 16, 2006, the board of directors and holders of a majority of the
then outstanding shares of common stock approved a 304.44-for-1 reverse stock-
split of the Company’s common stock which is anticipated to be completed on
or about November 16, 2006. Also in connection with the reverse merger, the
Company consummated two private financing transactions on September 7, 2006
and October 20, 2006, respectively, whereby the Company issued an aggregate
of 4,023,268 shares of its series B convertible preferred stock, and warrants
to purchase an aggregate of 13,257,293 shares of its common stock in exchange
for $9,281,600 gross cash proceeds. As a result of the reverse stock split,
the number of common shares outstanding will be approximately 18,384,915, and
assuming the exercise of all warrants, 31,973,207 on a fully diluted basis.
On a pro-forma basis the Company’s earnings per share for the three months
ending September 30th 2006 would be $0.105 based on outstanding shares.
About Sino Gas International Holdings, Inc.
Sino Gas International Holdings, Inc., through its wholly owned
subsidiary Beijing Gas Co., is a leading developer of natural gas
distribution systems in small- and medium-sized cities in China, as well as a
distributor of natural gas to residential, commercial and industrial
customers in China through indirectly owned subsidiaries in the PRC. The
company owns and operates 20 natural gas distribution systems serving
approximately 23,000 residential and four commercial and industrial
customers. Facilities include approximately 200 kilometers (“km”) of
pipeline and delivery networks with a designed daily capacity of
approximately 40,000 cubic meters of natural gas (“m3”). The company is
currently constructing four additional natural gas distribution systems and
is planning two more natural gas distribution systems. Beijing Gas Company
owns and operates natural gas distribution systems primarily in Hebei,
Jiangsu, and Shandong Provinces. For further information, visit the Company’
s website at http://www.bjgas.cn .
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning
of the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. All statements other than statements of historical fact in this
announcement are forward-looking statements, including but not limited to,
the Company’s ability to raise additional capital to finance the Company’s
activities; the effectiveness, profitability, and the marketability of its
products; legal and regulatory risks associated with the Share Exchange; the
future trading of the common stock of the Company; the ability of the Company
to operate as a public company; the period of time for which its current
liquidity will enable the Company to fund its operations; general economic
and business conditions; the volatility of the Company’s operating results
and financial condition; and other risks detailed in the company’s filings
with the Securities and Exchange Commission. These forward-looking
statements involve known and unknown risks and uncertainties and are based on
current expectations, assumptions, estimates and projections about the
companies and the industry. Although the company believes that the
expectations expressed in these forward looking statements are reasonable,
they cannot assure you that their expectations will turn out to be correct,
and investors are cautioned that actual results may differ materially from
the anticipated results.
All information in this release is as of November 14, 2006. The Company
undertakes no duty to update any forward-looking statements to conform the
release to actual results or changes in its circumstances or expectations
after the date of this release.
The financial information stated above and in the tables below has been
abstracted from the Company’s Form 10-QSB for the quarter ended September
30, 2006, filed with the SEC on November 14, 2006, and should be read in
conjunction with the information provided therein.
CONSOLIDATED CONDENSED INCOME STATEMENT and BALANCE SHEET FOLLOWS
Dolce Ventures, Inc. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(US$ - Unaudited)
Nine months ended Three months ended
September 30, September 30,
2006 2005 2006 2005
Net Sales $4,971,156 $3,319,668 $3,471,616 $851,442
Cost of Sales -1,849,128 -1,485,603 -865,641 -308,709
Gross Profit $3,122,028 $1,834,065 $2,605,975 $542,733
Selling and
Distributing
Costs -66,497 -66,668 -39,673 -24,805
Administrative
and Other
Operating
Expenses -693,973 -386,973 -440,154 -158,568
Income from
Operations $2,361,558 $1,380,424 $2,126,148 $359,360
Interest (Expenses)/
Income, net -2,169 1,182 973 37
Other Expenses,
net -159 -41,835 -30,417 -40,384
Other Income 13,205 11,838 -- 51,928
Income before
Taxes $2,372,435 $1,351,609 $2,096,704 $370,941
Income Tax -183,755 -106,943 -166,168 -32,242
Net Income $2,188,680 $1,244,666 $1,930,536 $338,699
Net Income per
Share, Basic
& Diluted 0.02 0.01 0.02 0
Weighted Average
Shares
Outstanding 100,770,140 100,770,140* 100,770,140* 100,770,140*
* Number of shares outstanding the day of the merger for comparison only
Dolce Ventures, Inc. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(US$ - Unaudited)
Assets September 30, December 31,
2006 2005
Current Assets
Cash and Cash Equivalents $5,328,306 $571,194
Accounts Receivable 6,887,070 7,770,168
Notes Receivables 225,213 372,442
Advances to Suppliers 250,406 12,097
Prepaid Expenses 93,433 437,922
Other Receivables 905,327
Total Current Assets $13,689,755 $9,163,823
Long Term Assets
Investments in Equity Securities $2,697,852 $2,443,378
Plant and Equipment, Net 3,443,273 3,200,682
Construction in Progress 5,798,781 3,071,497
Intangible Assets 448,406 437,265
Total Long Term Assets $12,388,312 $9,152,822
Total Assets $26,078,067 $18,316,645
Liabilities
Current Liabilities
Accounts Payable $457,120 $3,090,870
Other Payables 5,509,741 2,264,965
Unearned Revenue 103,616 133,035
Accrued Liabilities 146,184 201,384
Total Current Liabilities $6,216,661 $5,690,254
Total Liabilities $6,216,661 $5,690,254
Members Equity 12,626,391
Series A Convertible Preferred Stock,
Par value $0.001, Issued 14,361,647
shares at Sep 7, 2006;
Series B Convertible Preferred Stock,
Par value $0.001, Issued 2,509,782
shares at Sep 7, 2006.
Common Stock, Par value $0.001,
Authorized 250,000,000 shares,
Issued 100,770,140 at September 30,
2006 $100,700
Additional Paid-In Capital 11,262,749
Retained Earnings 8,497,957
Stockholders’ Equity $19,861,406 $12,626,391
Total Liabilities & Stockholders’
Equity $26,078,067 $18,316,645
Dolce Ventures, Inc. AND SUBSIDIARIES
CASH FLOW STATEMENT
(US$ - Unaudited)
Nine months ended
September 30,2006 September 30,2005
Cash Flows from Operating
Activities
Net Income $2,188,680 $1,244,666
Decrease/ (Increase) in Accounts
Receivable 617,274 -3,047,138
Increase in Notes Receivable -225,213 --
(Increase)/ Decrease in
Prepayments and
Other Receivables -426,705 838,013
(Decrease)/ Increase in Accounts
Payable -2,633,750 1,294,941
Increase in Other payables and
Accruals 3,160,157 329,185
Equity in an Investment -254,474 -43,279
Depreciation and Amortization 799,780 702,641
Net Cash Provided by Operating
Activities $3,225,749 $1,319,029
Cash Flows from Investing Activities
Purchases of Intangible Assets ($11,141) ($374,588)
Payment of Construction in
Progress -2,727,284 -385,427
Purchase of Fixed Assets -1,042,371 -1,072,002
Net Cash Used in Investing
Activities ($3,780,796) ($1,832,017)
Cash Flows from Financing Activities
Issuance of Common Stock $5,246,891 --
Net Cash Provided by Financing
Activities $5,246,891 --
Net in Cash and Cash
Equivalents(Used)/Sourced $4,691,844 ($512,988)
Effect of Foreign Currency
Translation on Cash and
Cash Equivalents 65,268 1,973
Cash and Cash Equivalents - Beginning
of Year 571,194 668,346
Cash and Cash Equivalents - End of
Year $5,328,306 $157,331